47th
ANNUAL REPORT ON RATIFIED PARTS OF THE
EUROPEAN CODE OF SOCIAL SECURITY
MADE BY THE
UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
TO THE COUNCIL OF EUROPE AT STRASBOURG
FOR THE PERIOD 1 JULY 2014 TO 30 JUNE 2015
THE UNITED KINGDOM HAS RATIFIED PARTS II, III, IV, V AND VII
Department for Work and Pensions
EU & International Affairs, Ground Floor
6-12 Tothill Street
London SW1H 9NA
24 July 2015
1

I. GENERAL
A. ADMINISTRATION/ORGANISATION
(a) Changes made during the reference period
The administrative and organisational set up remains as previously described.
The Department for Work and Pensions’ corporate website is at: www.gov.uk/government/organisations/department-for-work-pensions
(b) Changes planned
There is nothing to report.
(c) Research
DWP research reports published from 2010 onwards.can be viewed via the following link: https://www.gov.uk/government/collections/research-reports
This includes in-house research reports from 2011 to 2013 previously published separately.
2

B. BENEFITS
(a) Changes made
Benefit rates
– Great Britain
Benefit Uprating 2015
From 2013-14 to 2015-16 inclusive, two main factors have been used to increase benefits:

Benefits for disabled people and pensioners (not including the Basic State
Pension) are increased in line with the Consumer Price Index (CPI) inflation
(resulting in a 1.2% increase from April 2015); and

Most benefits and tax credits for working-age people are increased by 1%.
From 2012-13 onwards the Basic State Pension has been uprated in line with the
‘triple guarantee’ (or ‘triple lock’) which ensures that it increases by the highest of: the increase in earnings; price inflation (as measured by the CPI); or 2.5%. For the purposes of the 2015-16 uprating, 2.5% was the highest of these three benchmarks.
The Pension Credit standard minimum guarantee (a means-tested social assistance benefit) is required to be increased at least in line with earnings; the relevant earnings benchmark 1 rose by 0.6%. However, for the fifth year in a row the
Government decided on an above-earnings increase so that recipients of Pension
Credit Guarantee Credit receive the same cash increase as those on the Basic State
Pension.
The uprating of social security benefit rates in each financial year is normally based on inflation in the preceding September. Since 2011 the inflation measure used by default is the Consumer Prices Index (CPI). However, 2015-16 is the third consecutive financial year in which working-age benefits generally are being limited to a 1% increase (exceptions are disability/carer benefits and premiums and the
Employment and Support Allowance support component).
The application of the 1% limit in 2014-15 and 2015-16 was legislated in advance by the Welfare Benefits Up-Rating Act 2013 , passed in March 2013. Under the Act the orders implementing these 1% increases are not subject to any parliamentary procedure.
1
The change in average weekly earnings to July each year as measured by the Average Weekly
Earnings series (ONS data series KAC3 for July 2014).
3

The 1% increase under the 2013 Act covers the following benefits and tax credits:

The personal allowances for single persons and couples in Income Support, incomebased Jobseeker’s Allowance, Housing Benefit;

The personal rate of contributory JSA;

The basic rate of Employment and Support Allowance (income-related and contributory);

The Work-Related Activity Component of income-related or contributory ESA
(but not the Support Component);

Child Benefit;

Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay and
Statutory Adoption Pay;

The standard allowance for single or joint claimants in Universal Credit;
 The “limited capability for work” and lower rate disabled child elements in
Universal Credit;

The basic element, 30 hour element, second adult element and lone parent element of Working Tax Credit; and

The child/qualifying young person element of Child Tax Credit.
Great Britain
The Social Security Benefits Up-Rating Order 2015 2 increased the weekly benefit rates
(£GB) applicable in respect of the accepted Parts of the Code from April 2015 (see table below).
Northern Ireland
The same rates apply in Northern Ireland and are set out in the Social Security
Benefits Up-rating Order (Northern Ireland) 2015 S.R. 2015 No. 124 3 .
2 http://www.legislation.gov.uk/uksi/2015/457/contents/made
3 http://www.legislation.gov.uk/nisr/2015/124/made
4

BENEFIT RATES (April 2015)
SICKNESS BENEFIT (PART III)
STATUTORY SICK PAY
Earnings threshold
Standard rate
INCAPACITY BENEFIT
Long-term Incapacity Benefit
EMPLOYMENT AND SUPPORT ALLOWANCE
Personal Allowances under 25
25 or over lone parent under 18
18 or over
Work-related Activity Component (WRAC)
Support Component
Premiums enhanced disability single couple severe disability single couple (lower rate) couple (higher rate) carer pensioner single with WRAC single with support component single with no component couple with WRAC couple with support component couple with no component
5
(£GB)
112.00
88.45
105.35
57.90
36.20
73.10
57.90
73.10
29.05
15.75
22.60
61.85
61.85
123.70
34.60
49.05
41.90
78.10
86.95
79.80
116.00

UNEMPLOYMENT BENEFIT (PART IV)
Contribution based JSA - Personal rates April 2013
18 to 24
25 or over
OLD AGE BENEFIT (PART V)
State Pension: (increased by 2.5%)
Basic Sate Pension single
Spouse or civil partner’s insurance
The following were increased by 1.2% -
Additional pension:
Increments to:-
Basic pension
Additional pension
Graduated Retirement Benefit (GRB)
Inheritable lump sum age addition (over 80) - no change
FAMILY BENEFIT (PART VII)
Child Tax Credit (£GB yearly rates)
Family element
Family element (if child under 1)
Child element
Disabled child element
Severely disabled child element
Child Benefit (£GB weekly rates)
Eldest child
Each subsequent child
57.90
73.10
115.95
69.50
0.25
545
545
2,780
3,140
1,275
20.70
13.70
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II. MEDICAL CARE
(a) and (b) Changes made/planned during the reference period
The position remains as previously described.
Updates on Department of Health policies are available via the following links:
Department of Health policies
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(c) Research
The Department of Health in England continues to fund research (including evaluation) through the National Institute for Health Research - http://www.nihr.ac.ukhttp://prp.dh.gov.uk/
Published information on what the Government is doing about research and innovation in health and social care is available also via the following link: https://www.gov.uk/government/policies/research-and-innovation-in-health-andsocial-care
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III. SICKNESS BENEFIT
(a) Changes made during the reference period
The position remains as previously described, with the following update. The rates of the relevant benefits were increased as indicated in the table above (see I.B(a)).
Employment and Support Allowance (contribution based) - (ESA(C))
– update
Legislation
The Employment and Support Allowance (Repeat Assessments and Pending
Appeals Awards) (Amendment) Regulations 2015 which came into force from 30
March 2015 4 , provide that repeat claims to Employment and Support Allowance
(ESA) which are made or treated as made from the above date, are dealt with differently. Specifically, when a claimant whose most recent determination following a Work Capability Assessment (WCA) was they did not have limited capability for work makes a repeat claim, they will have to show that either their health condition has significantly worsened or they have a new health condition, before they can be awarded the assessment phase rate of ESA pending the outcome of a WCA. This is to ensure they claim Jobseekers Allowance rather than making a repeat claim to
ESA.
The Regulations also amend the circumstances in which payments are made to people appealing against a decision that they do not have limited capability for work.
Claimants will have no entitlement to ESA payments pending the outcome of an appeal when they have had two consecutive decisions that they do not have limited capability for work. This applies to repeat claims made, or treated as made, on or after 30 March 2015. Payments will continue to be made to those who are making their initial claim for benefit.
Incapacity Benefit Reassessment
The Department for Work and Pensions (DWP) is continuing the reassessment of existing Incapacity Benefit claimants to identify eligibility for Employment and
Support Allowance or fitness for work.
The DWP originally expected to re-assess around 1.5 million cases by April 2014.
Latest figures show around 1.4 million cases were completed by September 2014 5 .
This is because the number of cases being referred for reassessment was reduced in the late summer 2013 to concentrate resources on dealing with assessments for new claims for Employment and Support Allowance. The reassessment exercise is continuing with approximately 5,000 cases per month being referred.
4 http://www.legislation.gov.uk/uksi/2015/437/pdfs/uksi_20150437_en.pdf
5 https://wwwgov.uk/government/uploads/system/uploads/attachment_data/file/433578/esa-wcaoutcomes-and_appeals-june-2015.pdf
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Work Capability Assessment
The fifth, and final, annual independent review of the WCA, as required by Section
10 of the Welfare Reform Act 2007 6 , was carried out by Dr Paul Litchfield and published on 27th November 2014 7 .
This fifth Independent Review made 28 recommendations to the DWP, and 5 further recommendations to the Department for Social Development in Northern Ireland.
The recommendations focused predominantly on: the nature of the assessment; a focus on claimants with learning disabilities; and the increase in people currently assigned to the Support Group.
The Government’s response was published on 27th February 2015 8 - in this the
Government accepted all but two of the 28 recommendations falling within the scope of DWP.
Waiting Days
The previous Coalition Government extended the waiting days period for new claims to Employment and Support Allowance (ESA) from 3 to 7 days from 27 October
2014. This policy change was in line with an equivalent change to Jobseeker’s
Allowance regulations to ensure that all people subject to work conditionality – and this includes most sick and disabled people, serve a 7 days waiting period at the outset of their claim.
Waiting days are the days at the start of a claim in respect of which a claimant (who would otherwise satisfy the conditions of entitlement) is not entitled to benefit. The principle behind their use is to combat absenteeism and to discourage people from claiming benefit for short periods of sickness.
However the change does not apply to all new claimants. Under pre-existing rules, some people are exempt from serving waiting days. This includes people who are terminally ill, certain people discharged from HM Forces and those who received certain benefits, including ESA and Jobseeker’s Allowance within the preceding 12 weeks. These existing rules were retained when waiting days were increased.
Any claimant who must serve 7 waiting days, but is likely to suffer financial hardship until their first benefit payment, may apply for an advance of benefit, which will be recoverable from subsequent benefit payments.
This change in policy is generating savings which are being invested to several labour market measures to get people off benefits and into work.
6 http://www.legislation.gov.uk/ukpga/2007/5/contents
7 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/380027/wca-fifthindependent-review.pdf
9

This change was introduced into law via the
Social Security (Jobseeker’s Allowance and Employment and Support Allowance) (Waiting Days) Amendment Regulations
2014 (SI 2014/2309).
The accompanying Explanatory Memorandum can be viewed via the following link: http://www.legislation.gov.uk/uksi/2014/2309/pdfs/uksiem_20142309_en.pdf
Please see also the response to the ILO CEACR Committee’s conclusions, on the previous report, as set out in the Appendix .
(b) Changes planned
Employment and Support Allowance Pilots
The Government is testing different approaches to supporting ESA claimants in the
Work Related Activity Group (WRAG), with a prognosis of 18 months or more, to move closer to the labour market, to help the Department to understand what works for this claimant group.
The pilots will test the following three variants:

Health Care Professional (HCP) – work and health related focus;

Enhanced Jobcentre (JCP) Support – increased employment focus; and

Work Programme (WP)
– flexible support model, determined by the provider.
The pilots will run from 25 November 2013 to 26 August 2016. Claimants will spend two years on the pilot following recruitment.
The overarching intent of the pilots is to test whether an increase in health and work related support for ESA WRAG claimants, with a prognosis of 18 months or more, can deliver better outcomes than the WP and the standard Jobcentre support.
Success will be measured through improvements in health and/or perception of individual’s health and off flows into employment.
The evaluation will measure the outcomes of all three pilots. Evaluation methods will include qualitative and quantitative survey research with claimants, suppliers and
JCP staff. This research will gather evidence on a wide range of topics including details of the support received, delivery challenges, claimant’s perceptions of their health conditions and perceptions of readiness to work. The evaluation will also monitor the impact of the pilot interventions on employment and benefit outcomes via analysis of administrative data.
Fit for Work
As explained in the previous report, in November 2011, the then Government welcomed the findings of Health at Work - an independent review of sickness absence in Great Britain by Dame Carol Black and David Frost CBE.
The review produced recommendations calling for a number of improvements including:
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
A state-funded heath and work assessment and advisory service from 2014
(now Fit for Work );

The abolition of the Percentage Threshold Scheme to fund this service;

Access to Universal Jobmatch for those requiring job change;

Retention of tax relief on Employee Assistance Programmes;

Abolition of SSP record-keeping requirements;

Publication of revised fit note guidance;

Tax exemption on medical treatments recommended by Fit for Work or employer-arranged occupational health services.
The lack of access to occupational health advice was identified as one of the obstacles to people returning to work, especially within Small-medium enterprises
(SMEs). ‘Fit for Work’ will complement existing occupational health services and fill the gap in support where this exists.
The advice element of the service is now live, providing free advice to anyone requiring work-related health advice, including employees, employers and GPs.
On 9 March 2015, GPs in Sheffield and Betsi Cadwaladr University Health Board area began referring eligible patients to a Fit for Work occupational health assessment. Fit for Work will be expanded across England and Wales over a period of months with GPs being able to refer nationwide by autumn 2015. All employers nationally will be able to refer from autumn 2015, once GP referrals have fully rolled out. For more information about roll-out in England and Wales, please see www.fitforwork.org
Employers in areas where GPs can refer will in future receive Return to Work Plans, which will provide recommendations and evidence of sickness, replacing the need for a fit note.
Fit for Work is being delivered in England and Wales by Health Management Ltd and in Scotland by the Scottish Government via NHS Scotland. In Scotland the service is called Fit for Work Scotland ( www.FitforWorkScotland.scot
)
Fit for Work Scotland assessment service went live on 30 January 2015 in three
NHS Board areas, with Lanarkshire, Lothian and Tayside accepting referrals from
GPs. Roll-out will extend to the remaining NHS Board areas in spring 2015, including functionality to allow employers to make referrals. For information on Fit for Work
Scotland roll-out, please see www.fitforworkscotland.scot
(c) Research
Fit for Work: exploring future GP referrals ( 10 October 2014)
The aim of this study was to provide an estimate of the likely proportion of eligible employees that GPs would refer to FFW for assessment, to inform the project’s communication and engagement activity, identify the type of patients that GPs were most likely to refer and the factors affecting variation in GPs’ willingness to refer employees.
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https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/36244
3/rr883-fit-for-work.pdf
Understanding the Journeys from Work to Employment and Support
Allowance (ESA)
This research helps us to understand how people move from work to claiming
Employment and Support Allowance (ESA).
Key findings:

Of those in work immediately before their ESA claim, 29 per cent moved straight from work to claiming ESA without any period of sickness absence.

Those most at risk of leaving work without a period of sickness absence were: on a casual or agency contract; new to their job or part-time workers.

Those with mental health conditions were: less likely to have discussed their condition with their employer or to find adjustments helpful; and more likely to feel employers had not been supportive.
For the full report visit: https://www.gov.uk/government/publications/understandingthe-journeys-from-work-to-employment-and-support-allowance
Health and Wellbeing at work: Survey of Employees
This research helps us to understand health and work, what helps sickness absentees return to work and informs the Fit for Work strategy.
Key findings:

32% of employees had a health condition in the last 12 months, while 42% of employees had experienced at least one period of sickness absence.

Having a supportive employer and discussing health conditions at an early stage were associated with being less likely to have had more than two weeks off sick.

84% of employees thought that Fit for Work would be a useful service.
For the full report visit: https://www.gov.uk/government/publications/health-andwellbeing-at-work-survey-of-employees
Fit for Work Service pilots 2010 to 2013: final evaluation report
This research evaluates the effectiveness of pilots to help employees return to work after a period of sickness absence.
Key findings:

Nearly all those using the pilot service had either a musculoskeletal condition or a common mental health condition.

72% of clients absent from work on entering the pilot service had returned to work by the time they had left.
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Nine in ten clients were satisfied with the service they received, and around half thought the pilot service had helped them return to work sooner.
For the full report visit: https://www.gov.uk/government/publications/fit-for-workservice-pilots-2010-to-2013-final-evaluation-report
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Research report: Understanding the journeys from work to Employment and
Support Allowance (ESA), June 2015.
By Lorna Adams, Katie Oldfield, Catherine Riley, Becky Duncan and Christabel
Downing (IFF Research)
Visit: https://www.gov.uk/government/publications/understanding-the-journeys-fromwork-to-employment-and-support-allowance
Summary: The purpose of this research was to strengthen the evidence base on the journeys from work to making a claim for ESA.
The 2011 Independent Review of Sickness Absence (commissioned by the DWP) examined how to prevent job loss due to ill health and reduce associated costs. The review recommended further investigation to understand why some individuals move straight from work to ESA with no sickness absence first, and identifying for who this is most likely. This research aims to identify:
 those most at risk of health related job loss;

how employment characteristics (and other factors) influence whether an individual has access to, and takes up, sickness absence; and
 the support currently available from employers, including sickness absence
(for example, if/why some employers don’t pay Statutory Sick
Pay/Occupational Sick Pay).
Method: This research excludes those workers who have not worked for the last 12 months before submitting their ESA claim, the self employed, unless on contract or with an employment agency, and those whose claims are rejected. The research comprised:
 A quantitative survey: 3,301 telephone interviews with individuals who had submitted a claim for ESA.

Qualitative case studies: depth interviews with 22 employers and 16 claimants.
Findings: The findings from this research will inform measures to prevent people from falling out of work due to ill health. Key findings were:
 Of those who were in work immediately before making their ESA claim, 29 per cent moved straight from work to claiming ESA without any period of sickness absence.
 Those most at risk of leaving work without a period of sickness absence were more likely to be: on a casual or agency contract; new to their job or part-time workers.
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An Evaluation of the ‘Individual Placement and Support (IPS) in Increased
Access to Psychological Therapies (IAPT)’ Psychological Wellbeing and Work
Feasibility pilot (March 2015)
By Karen Steadman, Rosemary Thomas (Work Foundation, commissioned by
Department for Health, in partnership with the Department for Work and Pensions) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/41517
7/IPS_in_IAPT_Report.pdf
Summary: This report is an evaluation of a pilot service which provided embedded vocational support, based on the Individual Placement and Support (IPS) model, into the Increasing Access to Psychological Therapies (IAPT) programme.
This was one of four pilots commissioned by Department of Health (DH) and
Department for Work and Pensions (DWP), informed by the 2014 report by RAND
Europe on Psychological Wellbeing and Work: Improving Service Provision and
Outcomes . These small-scale, feasibility pilots and their evaluations were to test the design detail of the models proposed, methods of tracking findings and the initial effects. In particular they were designed to test which type of increased support best improves service users likelihood of moving closer to work or into work, as well as highlighting any health and wellbeing outcomes.
Method: Research was undertaken with IPS employment specialists, service managers, Jobcentre Plus (JCP) ESA (ESA) Work Coaches, and service users
– made up of specified groups of ESA JCP clients. Information on service usage, and health and employment measures was also collected from service users who consented to participate in the evaluation.
Findings: Across the different participant groups, and across the pilot sites, there was considerable positivity about the IPS and IAPT service, including in those sites that did not already have a similar service in place. Fifteen service users found paid employment, and many other service users achieved other employment-related outcomes, and experienced an increase in health and wellbeing, and job search selfefficacy.
However, there was considerable variation as to how well sites performed, with some sites struggling to get referrals, and high drop-out levels.
Employment and Support Allowance Testing
The DWP is undertaking a number of trials and proofs of concepts, to help the
Department understand ‘what works’ at each stage of the ESA process.
Testing currently underway includes:
- ESA 18-24 Month Prognosis Pilots – testing approaches to providing increased support to WRAG ESA claimants who have an 18-24 month prognosis (See attached memo detailing trial aims: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/2
69256/work-programme-memo-141.pdf
)
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- IAPT (Increased Access to Psychological Therapies) – a number of trials (in partnership with Department for Health) testing approaches to increasing access to psychological therapies (for findings from one of the completed trials, see above: An Evaluation of the ‘IPS in IAPT’ Psychological Wellbeing and
Work Feasibility pilot).
The Department is also looking to develop further tests, focussing on the following key areas for evidence:

Early intervention
– to help people manage health conditions and stay in work
 Benefit design - to maximise employment outcomes and support those unable to work
 Assessment
– i.e. the ESA WCA

Tailored or integrated support - to tailor support to individual needs
 Conditionality - to incentivise job-seeking activity
 Employer incentives
15

IV. UNEMPLOYMENT BENEFIT a) Changes made during the reference period
Waiting Days
As explained above in respect of Part III, the government extended the waiting days period for new claims to Jobseeker’s Allowance (JSA) from 3 to 7 days from 27
October 2014, which is compatible with Article 24, paragraph 3 of the Code.
This policy change was in line with an equivalent change to Employment and
Support Allowance regulations to ensure that all people who are subject to work conditionality rules serve a 7 days waiting period at the outset of their claim.
This change does not apply to all new claimants. Under pre-existing rules, some people are exempt from serving waiting days. This includes people who including
ESA and Jobseeker’s Allowance within the preceding 12 weeks. These existing rules were retained when waiting days were increased.
Any claimant who must serve 7 waiting days, but is likely to suffer financial hardship until their first benefit payment, may apply for an advance of benefit, which will be recoverable from subsequent benefit payments.
This change in policy is generating savings which are being invested to several labour market measures to get people off benefits and into work.
This change was introduced into law by the Social Security (Jobseeker’s Allowance and Employment and Support Allowance) (Waiting Days) Amendment Regulations
2014 (SI 2014 No.2309).
Northern Ireland a) Changes made during the reference period
Client Offer
Employment Service Client Offer provides an all age range of work focused provision and support delivered by frontline staff to assist clients to move towards and into employment. This support includes work focused interventions delivered by skilled
Employment Service staff and tailored to individual customer needs. A comprehensive toolkit of work focused programmes and training is offered with financial assistance and signposting to external support also available. A Jobclub service is also available for clients who require a more intensive intervention and support in preparing for and moving towards work.
The Customer Journey for Jobseeker’s Allowance clients is in preparation for the introduction of Universal Credit.
The core interventions for those claiming Jobseeker’s Allowance comprises a series of face to face meetings as follows:
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 Initial Work focused Interview
 Subsequent Review Meetings
 Fortnightly Jobsearch Review
At the Fresh claim stage, an Initial Work focused Interview is carried out by an
Employment Service (ES) Adviser and, in addition to the Jobseeker’s Agreement, includes a diagnostic (evidence based) assessment and the completion of an agreed
Action Plan. The Adviser uses a ‘Work Readiness Toolkit’ based on a Red, Amber,
Green (RAG) assessment to measure a client’s distance from employment and enables an Adviser to tailor the service to meet a client's needs.
Subsequent Review Meetings are determined by the Adviser diagnosis and decisions regarding the timing of these flexible interventions are driven entirely by what is needed to ensure that a client moves into work as quickly as possible.
Fortnightly Jobsearch Reviews are completed by ES Officers to determine if Labour
Market Conditionality has been met and will also reflect the discussion with a client to show progression in skills development or jobsearch activity. This facilitates the monitoring of client progress towards moving into employment.
Steps 2 Success
The Department for Employment and Learning introduced the Steps 2 Success
(S2S) programme to replace the Steps to Work Programme as the Department’s main employment programme for unemployed people. The contracts to deliver S2S in the three contract areas were awarded in July 2014 and the programme became operational on 20 October 2014.
S2S has been designed to offer an individualised service to each participant. The contractor agrees a Progression to Employment Plan (PEP) with each individual which outlines what each must do to improve the partici pant’ s employability and to find and keep employment. The PEP is updated on a regular basis to take account of the participant’s progression.
The level of service to all participants is defined in a Service Guarantee which details the minimum level of service that each participant will receive.
To date there have not been any official statistics published on the performance of
S2S. The contractors have been set challenging targets above the actual performance achieved in the Steps to Work Programme.
Local Employment Intermediary Service (LEMIS)
The Local Employment Intermediary Service (LEMIS) was a community employment initiative designed to help the “hardest to reach” in targeted areas find employment.
The service was provided by local community employment organisations in Belfast,
Londonderry, Strabane, Newry and Mourne, Moyle and Cookstown, all of which were areas identified by the Noble Indices of Multiple Deprivation as having high levels of deprivation and unemployment in Northern Ireland.
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LEMIS 2 contracts operated from April 2011 to March 2015. Funding for the continuation of a LEMIS Plus programme has been applied for through the new NI
European Social Fund (ESF) Investment for Growth & Jobs Programme (under
Priority 1
– Access to employment for job- seekers, including the long-term unemployed and people far from the labour market - Thematic Objective 8-
Promoting sustainable and quality employment and supporting labour mobility) from April 2015 to March 2018.
A full Evaluation of the Pathways to Success NI Strategy was carried out by the
Centre for Economic and Social Inclusion with a final report being submitted in
March 2015. Some key strengths of LEMIS were detailed as; 7,127 individuals have received support through LEMIS between 2011 and 2014, with 5,575 recorded as having left support. Of these, 1,318 are recorded as having entered full-time (FT) employment. This is equivalent to 18% of all participants, or 24% of those recorded as leaving the programme.
Community Family Support Programme (CFSP)
The Community Family Support Programme (CFSP) is a ‘Pathways to Success’ initiative and a Delivering Social Change signature project entitled ‘Pathways to
Employment for Young People’. The programme has been designed to help families make life changing decisions to enhance their prospects and become full participants in society. The CFSP will be funded through the new NI European Social Fund (ESF)
Investment for Growth & Jobs Programme (under Priority 2 – Social Inclusion, -
Thematic Objective 9 – Promoting social inclusion, combating poverty and any discrimination) from April 2015 to March 2018.
The programme will become operational from April 2015 and be delivered by providers from the voluntary & community sector in six contract areas in NI. (The
ESF Management Authority will be responsible for managing the programme)
The overarching aim is to enhance social inclusion and combat poverty by reducing the number of NEETs aged (a) 16 to 24 years and (b) those aged 25 and above. The programme also aims to reduce the number of young people aged 13 to 16 years entering the NEET category.
The target audience includes:

NEETs (16 – 24 years);

Families of NEETS – with children 13 to 16 years that have the potential of becoming NEETs and 25+ family members that are unemployed / economically inactive;
 Health & Social Care Trusts’ staff working with families;

Community and Voluntary Sector Organisations working with families;

Multi Agency Outcomes Group (Statuary and Voluntary organisations);

Schools / Careers Service NI / Education & Library Boards;

Family Support Hubs; and

the Youth Justice Agency.
The aim of the CFSP is to support families with a high level of need to develop their capacity to reach their full potential by addressing the employment, educational,
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training, health, social and economic issues that impact on their daily lives. A specific objective of the programme will be to reduce the number of NEETs (of 16 – 24 years
& 25+ years) in NI. The main focus of the programme would be on employability with a family support dimension.
The three components of the programme would be to provide:-

an employability mentoring support service to address family members(of
16+years) educational, employment and training needs;

a family support and referral service to a ddress family members’ health, social and economic needs; and

a mentoring support service to address family members aged 13 to 16 educational needs to help prevent them falling into the NEET category.
Communication Objectives:-

To raise awareness to target audience in 6 contract areas in NI and seek referrals to the programme; and

To have a minimum of 780 NEETs / families per year (a minimum 130
NEETs/ families in each contract area) participating on the programme.
United Kingdom b) Changes planned
Nothing to report c) Research
Day One Support for Young People trailblazer
(27 November 2014)
The Day One Support for Young People (DOSfYP) Trailblazer was a European Social
Fund (ESF)-funded
1 mandatory programme designed to help young people aged 18 to
24 with less than six months’ work history get the skills and experience they need to help them move into employment.
Work Programme evaluation: 'day one mandation' of prison leavers
(18 December 2014)
Work Programme evaluation: operation of the commissioning model, finance and programme delivery
(18 December 2014)
Work Programme evaluation: participant experience
(18 December 2014)
19

V. OLD-AGE BENEFIT
Pension uprating
The Annual 2015 Uprating of Benefit saw the Basic State Pension and additional increments payable increased by 2.5 %. Please see also the response in regard to annual uprating in benefits generally in I.B(a) above.
(a) & (b) Changes made and planned
Please see the response to the ILO CEACR Committee’s conclusions, on the previous report, as set out in the Appendix below.
Northern Ireland
Northern Ireland measures corresponding to the Pensions Act 2014 were approved by the Northern Assembly on 11 May 2015. The measures include the introduction, in 2016, of a single-tier State Pension designed to reduce the complexity of the current system, support the introduction of workplace pension reform and pay a higher weekly amount than the current State Pension. The new system will recognise pre-2016 National Insurance contributions so that individuals are not disadvantaged and will build on the existing range of National Insurance credits awarded to those who have had care responsibilities.
United Kingdom
(c) Research
New State Pension: qualitative research on the ideal customer journey
(24 October 2014)
Automatic enrolment: qualitative research with employers staging in 2014
(5 January 2015)
VII. FAMILY BENEFITS
(a), (b) & (c)
The position remains as previously described. Current Child Benefit and Child Tax
Credit rates are as set out in the Table (see Part I.B(a) above).
Information on how Child Tax credits are calculated can be viewed via the following link http://www.hmrc.gov.uk/taxcredits/payments-entitlement/entitlement/question-how-much.htm
20

XI. FINANCING
United Kingdom
(a) Changes made during the reference period.
From April 2015 the employee and employer’s rates of National Insurance contributions (NICs) were unchanged. For employees the rate remained at 12% on earnings above the primary threshold up to the upper earnings limit (UEL). It also remained at 13.8% for employers above the secondary threshold. In addition, NICs remains payable at 2% on earnings above the upper earnings limit by employees.
For employees all limits and thresholds increased in line with inflation with the exception of UEL which was increased by £10 to £815 per week to align with the point at which the higher rate of income tax becomes payable. The Upper Accrual
Point remains frozen at a weekly level of £770, the same as when it was introduced on 6 April 2009. With regard to the self-employed, the rate of Class 4 NICs remains at 9% on profits between the Lower and Upper Profits Limit (UPL). In addition, the
Class 4 NICs is payable above UPL at a rate of 2%. The Lower Profits Limit was increased in line with inflation by £104 to £8060 per year. Flat rate Class 2 contributions, which secure access to benefits, were increased by £0.05 to £2.80 per week. For the non-employed, the flat rate of Class 3 contributions was increased by
£0.20 per week to £14.10 per week.
From April 2015, employer National Insurance contributions (NICs) are abolished for under 21 year olds on earnings up to the upper secondary threshold (£815 a week in
2015-16). The abolition of employer NICs for under 21s will lower the cost of their employment considerably. For example, it will become over £500 cheaper to employ an under 21 year old earning £12,000 a year, and over £1,000 cheaper to employ an under 21 year old earning £16,000 a year. Employers of around 1.8 million young people aged between 16 and 21 will benefit from the abolition of their NICs liabilities, by about £332 per employee on average.
21

Tables on earnings-related contribution rates
Table 1 - 2014/2015 not contracted
–out
WEEKLY
EARNINGS
EMPLOYEE EMPLOYER
Nil - £111 Nil
STANDARD
£111.01 - £153 0%
£153.01 – £805 12% of that part of earnings which exceeds £153 but
Nil
0%
REDUCED
5.85% of earnings between £153 and
£805
Nil
0%
13.8% of all earnings which exceed £153 does not exceed
£805
Above £805
2% of that part of earnings which exceed £805
2% of that part of earnings which exceed £805
Table 2 - 2014/2015 contracted-out
Employers pay standard rate contributions at the not-contracted-out rate on earnings over £770, which is the new weekly Upper Accrual Point
WEEKLY
EARNINGS
EMPLOYEE EMPLOYER*
Nil - £111
STANDARD
Nil
£101101 – £153 0%
£153.01 – £770 10.4% of that part of earnings which exceeds £153 but does not exceed
£770
£770.01 to £805
12% of that part of earnings which exceeds £770 but does not exceed
£805
Above £805 2% of that part of earnings which exceed £805
Nil
0%
REDUCED
5.85% of earnings between £153.01 and £805
2% of that part of earnings which exceed £805
Nil
0%
10.1% on earnings between £153.01 and £770
13.8% on all earnings which exceed £ 770
* Rates only apply to Contracted-out Salary Related Occupational Pension
Schemes. A different structure and rate applies to Contracted-Out Money Purchase
Schemes.
22

(b) Changes implemented for the 2015/2016 tax year
April 2015 uprating increases
Table 1 - 2014/2015 not contracted –out
WEEKLY
EARNINGS
EMPLOYEE EMPLOYER
Nil -
£112
£112.01 - £155
Nil
0%
STANDARD
£155.01 – £815 12% of that part of earnings which exceeds £155 but
Nil
0%
REDUCED
5.85% of earnings between £155 and
£815
Nil
0%
13.8% of all earnings which exceed £155 does not exceed
£815
Above £815 2% of that part of earnings which exceed £815
2% of that part of earnings which exceed £815
Table 2 - 2014/2015 contracted-out
Employers pay standard rate contributions at the not-contracted-out rate on earnings over £770, which is the weekly Upper Accrual Point
WEEKLY
EARNINGS
EMPLOYEE EMPLOYER*
Nil - £112
STANDARD
Nil
£112.01 – £155 0%
£155.01 – £770 10.4% of that part of earnings which exceeds £155 but does not exceed
£770
£770.01 to £815
12% of that part of earnings which exceeds £770 but does not exceed
£815
Above £815 2% of that part of earnings which exceed £815
Nil
0%
REDUCED
5.85% of earnings between £155.01 and £815
2% of that part of earnings which exceed £815
Nil
0%
10.1% on earnings between £155.01 and £770
13.8% on all earnings which exceed £ 770
* Rates only apply to Contracted-out Salary Related Occupational Pension Schemes. A different structure and rate applies to Contracted-Out Money Purchase Schemes .
23

Government Actuary’s Report 2014/15
The Report of the Government Actuary on the potential impact on the National
Insurance Fund of the draft Social Security Benefits Up-rating Order 2014 and the draft Social Security (Contributions) (Re-rating) Order 2014 that were to introduce the 2014 annual rates of Contributions and Benefits as set out in Tables 1 and 2 above, and also the response in respect of the table of benefits set out in Part I B of this report above, can be viewed via the following link: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/27529
4/36532_GAD_Report_Web_Accessible.pdf
(c) Research (including evaluation), completed or initiated
Research and statistics commissioned by, or relevant to,
Her Majesty’s Revenue and
Customs may be found here: http://www.hmrc.gov.uk/thelibrary/research.htm
24

APPENDIX
Response to the issues raised in the Conclusions of the Committee of Experts on the Application of Conventions and Recommendations of the International
Labour Organization concerning the application of the European Code of
Social Security by the United Kingdom
Part III (Sickness benefit) of the Code.
Statutory sick pay (SSP).
(a) Article 18(1). SSP Waiting period.
The Committee would ask the Government to explain whether, in case such non-working days fall inside the waiting period of three qualifying days, the total duration of the waiting period would be longer than three days of suspension of earnings authorized by the Code.
Statutory Sick Pay (SSP) is payable for periods of interruption of work (PIW) because of sickness. A PIW must be of four or more calendar days in a row
(including non-working days)
– the first three qualifying days sickness are ‘waiting days ’. SSP is payable for qualifying days, which are the employee’s contractually agreed normal weekly working days, including any such day on which a Public
Holiday falls. SSP therefore becomes payable from the fourth normal working day for which earnings have been suspended.
If a second period of sickness absence occurs within 8 weeks of a previous absence, for which SSP was paid, no waiting days apply and SSP is payable for all qualifying days in the second period of sickness absence.
(b) Article 72(2). General responsibility of the State
Taking into account that the Government has apparently fully withdrawn from managing the SSP scheme, the Committee would like to know whether it still accepts the general responsibility for the proper administration of the SSP scheme, in accordance with Article 72(2) of the Code.
The Committee has gained the wrong impression from the Government having eased the administrative burden on business. The proposal, to remove the statutory record-keeping obligation on employers, to keep administrative records solely for
SSP purposes, is reflected in the concerns expressed in conclusions in paragraph 75 on page 39 of the report ‘ Health at Work ’ of Dame Carol Black and David Frost CBE
(see also the section on Fit for Work in the response iro Part III.(a) above):
“Employers also bear considerable administrative costs in relation to SSP, mainly around the requirement to maintain records for three years of all sickness absence lasting for four days or more. The provision is required to ensure a record is available for SSP compliance checks by Her Majesty’s Revenue and Customs (HMRC) and to support claims under the
PTS scheme. The record is also useful in case of a dispute. This regulation also requires
25

employers to maintain a record of all SSP payments associated with these spells of sickness. This costs private business an estimated £44 million a year”.
The Government has not withdrawn from managing the SSP scheme and does retain responsibility for ensuring its proper administration along with other statutory payments by employers. SSP counts as earnings and is paid as part of a worker’s wages via the employer’s payroll, through which pay as you earn income tax and
National Insurance (social security) contributions are deducted and remitted to Her
Majesty’s Revenue and Customs (HMRC). Employer’s payroll schemes are policed by HMRC officials and Inspectors. HMRC carries out risk-based enquiries and compliance checks to ensure that employers are correctly making deduction as well as making statutory payments e.g. for sickness, maternity, paternity and adoption.
Published and online HMRC Employer’s and Employee’s Guides on SSP and other
Statutory Payments set out how disputes about an employee’s entitlement can be resolved through: online and telephone help desk facilities; informal and formal dispute resolution procedures; or, failing those, through an Employment Tribunal.
Employment and support allowance (ESA).
(a) Article 18(1). ESA Waiting period.
The Committee draws the Government’s attention to Article 18(1) of the Code which limits the number of waiting days to sickness benefit to three, as provided for in the existing ESA regulations. Please explain also whether a sick person who claims ESA after SSP has to accomplish the respective waiting periods separately under each benefit scheme.
The Government acknowledges that the measure to extend waiting days to seven for
Employment and Support Allowance (ESA) is not compatible with Article 18(1) of the
Code.
However the extension of waiting days is an important part of the Government’s welfare reform agenda, and reflects the Government’s view that people should, where possible, support themselves financially during the first days of unemployment or sickness. The policy aligns the position on ESA with that of Jobseeker’s
Allowance (JSA). Under the Government’s welfare reforms the new Universal Credit
(UC) is to replace income based ESA and Jobseekers Allowance. The alignment of the waiting day rules for all three benefits was an integral part of the new benefit design and roll out.
The Government’s view is that the policy rationale for this change applies equally to
Jobseeker’s Allowance (JSA) and ESA. The Government is also of the view that if
ESA were to be exempt from this change, a perverse incentive could have been created, whereby people claim ESA first before claiming JSA in order to gain an additional four days benefit. There is also a risk that people may seek to avoid more stringent work conditionality rules in JSA by claiming other benefits, and the
Government did not wish to add to this risk by introducing a disparity in waiting days policy between ESA, JSA and UC.
26

It is important to re-iterate that the Government does provide exemptions to the serving of waiting days in certain circumstances and where new claimants find themselves in financial hardship they can apply for a short term benefit advance.
This change in waiting days did not affect Statutory Sick Pay (SSP), so anyone claiming SSP continues serve three waiting days. If they subsequently claim ESA within 12 weeks of a previous SSP award, no further waiting days will be served.
This disparity was considered by the Government. However, one of the main objectives of the SSP is to make it as simple as possible for employers to administer and understand. Any changes to the SSP legislation, to bring waiting days in line with those for ESA, would impact business and could add administrative complexity.
The Government does not regard the difference between ESA and SSP as a fundamental concern, and does not plan to align both.
(b) The regime of sanctions.
Taking into account the alignment of the ESA scheme with the jobseeker’s allowance scheme, the Committee requests the Government to indicate whether this decision might have an impact on the regime of sanctions imposed under the ESA and indicate the outcome of the appeal.
The High Court judgment did not involve, or affect, ESA cases. The appeal is scheduled for hearing in November 2015.
Part V (Old-age benefit), Article 26(2).
The Committee would like the Government to explain whether, in taking the decision to increase state pension age beyond 65 years, due regard was given to the provisions of Article 26(2) of the Code and of Convention No. 102 and to the working ability of elderly persons in the United Kingdom, and to supply corresponding data on the health status of people in retirement age demonstrating that increased life expectancy is accompanied by longer life expectancy in good health.
Legislation to increase State Pension age beyond 65 was first passed in 2007. In response to recommendations from the independent Pensions Commission, the then government set out a timetable for gradually increasing State Pension age to 68 by
2046.
The 2011 and 2014 Pensions Acts brought forward the rise to 66 and 67 respectively. These changes to the State Pension age timetable responded to rapid growth in life expectancy. As the tables below set out, growing longevity was accompanied by significant increases in healthy life expectancy and in the old age dependency ratio.
The 2014 Act also introduced a review framework, which means that future governments must consider State Pension age each Parliament, taking into account up-to-date life expectancy data and the findings of an independently-led review, which will consider wider-relevant factors. These factors are to be determined by the
27

government of the day but are likely to include healthy- and disability- free life expectancy.
The Government has also taken action to support older workers, abolishing the default retirement age and extending the right to request flexible working.
Trends in life expectancy

Life-expectancy in the UK has seen an upward trend in recent decades, as have healthy life expectancy (HLE) and disability-free life expectancy (DFLE);

HLE pertains to life spent in good health, whereas DFLE corresponds to life free from a limiting chronic illness or disability
– both are based on survey data from GHS and the CHS 9 , and consequently on measures of selfassessed health;

HLE and DFLE based on survey measures are globally used to compare the health status of populations through time as well as in the assessment of healthy ageing and fitness for work;

Between 2000-02 and 2009-11 life expectancy at age 65 went up by 2.1 years for men and 1.6 years for women;

In the same period, HLE at age 65 went up by 1.2 years for men and 1.3 years for women, while DFLE increased 1.7 years for men and 0.8 years for women;
 In other words, every 1 year increase in men’s life expectancy was accompanied by a 0.6 year increase in HLE and a 0.8 increase in DFLE. For women, a 1 year increase in life expectancy was followed by a 0.8 year increase in HLE and a 0.5 year increase in DFLE. The figures below show the trends in LE, HLE and DFLE for men and women.
Source: ONS LE, HLE and DFLE estimates for the UK
9 GHS is the General Household Survey, an annual cross-sectional survey of private households. It is not just about health, but it incorporates a EU-SILC harmonised general health question (and has done since 2005). The
Continuous Household Survey (CHS) covers Northern Ireland.
28

Dependency ratio projections
 Due to falling fertility rates and increasing longevity, the UK’s dependency ratio (ratio of people over State Pension age (SPa) to the working-age population) is projected to increase substantially in the next few decades.

If no changes are made to SPa, the dependency ratio is projected to increase to close to 50% by 2050. Changes in SPa would allow the dependency ratio to remain close to the current value of 30% in the medium term.
Source: ONS Population estimates and 2008-based principal population projections
Trends in older workers’ employment

The participation rate of older workers (aged 50 to SPa) in the UK labour market has gone up over the past two decades, from close to 69% in the last quarter of 2004 to around 75% in the last quarter of 2014.

The participation rate of those over SPa has also increased in this period
– from around 8% to close to 12%. The trends set out in the table below.
29

Source: ONS using LFS datasets, 4 quarter rolling averages

Trends in worklessness for people age 50-SPa show a decrease in the proportion of people out of work due to sickness or disability. For men, this percentage fell from over 16% in 1998 to around 10% in 2013, whereas for women it decreased from over 14% to around 10% in the same period.
Source: LFS, quarter 4 data
 Women’s SPa has been going up to equalise with men’s at 65, rising from 60 to 61 between April 2010 and March 2012 and from 61 to 62 between April
2012 and March 2014. These policy changes have been accompanied by
30

increases in participation rates (both employment and unemployment rates) of women aged 60-61.

The Institute for Fiscal Studies (IFS) 10 estimates that the SPa increase from
60 to 61 was associated with an increase in the probability of employment for
60 year old women of around 6%. The increase from 60 to 62 was associated with an increase in the probability of employment for 60-61 year old women of around 5.4%.
Part XI (Standards to be complied with by periodical payments), Article 66 of the
Code. Determination of the reference wage used for calculating the replacement level of benefits. The Committee requests the Government to specify which option (a) or (b) in Article 66 is selected, and review the methodology used for determining the reference wage in the light of the information contained in the technical note prepared by the Office and attached to the present conclusions, which sets out and calculates for the United Kingdom all the options allowed by the Code for determining the reference wage on the same time basis for which comparable data are available (2010). Please update the statistics used in the note indicating the precise source of the data to be used for future reference.
In regard to the ILO technical note provided on the UK, Option 4 [Article 66(4)a] refers to ISIC Rev 4, Division 28 (Manufacture of Machinery and Equipment
N.E.C). ISIC Rev 4 and UK SIC (2007) are identical at the two divisional level. In addition, Division 28 excludes manufacture of electrical machinery, and therefore meets the requirement specified. The requirement also states "a person deemed typical of unskilled labour". The best match for this criterion is SOC 2010 Sub-Major
Group 91 (Elementary Trades and Related Occupations). So, from a Classifications point of view, using SOC 2010 Sub-Major Group 91 in conjunction with UK SIC
(2007) Division 28 would, in the Government’s view, provide the closest match to the requirement specified.
Statistics based on this Classification have now been produced and published 11 , but unfortunately are available only from 2011 onwards. Details of the relevant wage are as follows:
10
Cribb, J., C. Emmerson and G. Tetlow (2013), ‘Incentives, shocks or signals: labour supply effects of increasing the female state pension age in the UK’, IFS Working Paper, W13/03. Available at: http://www.ifs.org.uk/publications/6622
Cribb, J., C. Emmerson and G. Tetlow (2014), ‘Labour supply effects of increasing the female state pension age in the UK from age 60 to 62’, IFS Working Paper, W13/03. Available at: http://www.ifs.org.uk/uploads/publications/wps/wp201419.pdf
11 http://www.ons.gov.uk/ons/about-ons/business-transparency/freedom-of-information/what-can-irequest/published-ad-hoc-data/labour/june-2015/index.html
(004242 Table 2 Full Time 09 June 2015)
31

Median gross weekly earnings (excluding overtime) for full-time male employees a who are classified as unskilled labourers b in the manufacture of machinery other than electrical machinery c , UK, April 2011 to 2014
£ (current prices)
Year (April) Median
2011
2012
348.7
357.2
2013
2014 p
375.2
373.4
Source: Annual Survey of Hours and Earnings (ASHE), Office for National Statistics
Notes:
(a) Estimates are based on employee jobs, which are defined as those held by employees and not the self-employed. Figures relate to employees on adult rates whose pay for the survey pay period was not affected by absence. ASHE is based on a 1% sample of jobs taken from
HM Revenue and Customs' Pay As You Earn (PAYE) records. Consequently, individuals with more than one job may appear in the sample more than once.
(b) Standard Occupational Classification (SOC) 2010 Sub-Major Group 91 - Elementary
Trades and Related Occupations.
(c) Standard Industrial Classification (SIC) 2007 Division 28 - Manufacture of Machinery and Equipment N.E.C. p. 2014 data are provisional.
Guide to quality:
All estimates in the table have a coefficient of variation (CV) of greater than 5% and less than or equal to 10%.
The CV indicates the quality of an estimate; the smaller the CV, the higher the quality. The true value is likely to lie within +/- twice the CV. For example, for an estimate of £200 with a
CV of 5%, we would expect the true population value to be within the range £180 to £220.
This is given by 200 +/- ({2*0.05}*200).
The Technical Note refers to the clarification in the UK’s 44 th Report, in which the
Government pointed out that two key methodological changes had taken place in
2007, affecting the collection and processing of ASHE data that also impacted on the earlier releases, but the link to the publication was broken. For future reference, if needed, a fully operative link is given in the footnote below 12 .
The Government proposes to complete the forthcoming 2016 detailed periodic reports on both the Code and ILO Convention No. 102, on the basis of a reference wage to be established in line with the above described Classification (i.e. in line with
Option 4). However, in keeping with the consensus view of the states’ party to the
12 http://www.ons.gov.uk/ons/guide-method/method-quality/specific/labourmarket/annual-survey-of-hours-and-earnings/annual-survey-of-hours-andearnings/changes-to-ashe-in-2007.pdf
32

Code during the discussions on this issue at the Council of Europe’s Governmental
Committee in May 2015, and given that such UK statistics are available only from
2011 onwards, the Government does not propose to attempt to revisit the detailed calculations in the UK’s previous detailed (43 rd ) Report.
Social security and reduction of poverty.
The Committee asked the Government to explain the difference between relative low income and absolute low income in more detail.
Households Below Average Income - An analysis of the income distribution
(1994/95 – 2013/14) – Statistics on the number and percentage of people living in low-income households - published 25 June 2014 (United Kingdom)
This latest report in the
“Households Below Average Income” (HBAI) Series, published on 25 June 2015, presents information on living standards in the United
Kingdom. It provides annual estimates on the number and percentage of people living in low-income households. Figures are also provided for children, pensioners, working-age adults and individuals living in a family where someone is disabled.
Key findings:

The average (median) household income in 2013/2014 (both before and after housing costs) is unchanged from 2012/2013.

The percentage of individuals in relative low income has been decreasing gradually since 2008/09, and is at its lowest level since the 1980s.

The percentage of children, pensioners and families where at least one member is disabled, who were in relative low income has remained relatively stable.
The report provides detailed information on how relative and absolute low income are defined (see via link below).
To summarise:

Equivalisation. Relative and absolute low income are both calculated using equivalised incomes. Equivalisation adjusts incomes for household size and composition, taking an adult couple with no children as the reference point. For example, the process of equivalisation would adjust the income of a single person upwards, so their income can be compared directly to the standard of living for a couple. The equivalisation factors used in Households Below Average Income are: o First adult 0.67 o Other adult 0.33 o Children 14yrs and over 0.33 o Children under 14 years 0.2

Relative low income measures the number and proportion of individuals who have household incomes below 60% of the median in that year - and is used to look at how changes in income for the lowest income households compare to changes in incomes near the ‘average’.

Absolute low income measures the proportion of individuals who have household incomes below 60% of the median in 2010/11, adjusted for inflation (using the
33

retail price index). It is used to look at how changes in income for the lowest income households compare to changes in the cost of living.

Median. The median income is the amount which divides the income distribution into two equal groups, half having above that amount and half having below that amount.
For the full report visit: https://www.gov.uk/government/statistics/households-belowaverage-income-19941995-to-20132014
In respect of the Government’s previous Report, the Committee noted that
“Persistent poverty is where someone lives in a household where income is less than 60 per cent of average household income for at least three out of the last four years; some variations of relative and absolute low income
– where someone lives in a household that receives less than 50 or 70 per cent of the average household income. Relative low income, absolute low income, persistent poverty, and variations of relative and absolute low income are measured both before housing costs and after housing costs. Housing costs include: rent (gross of housing benefit); water rates, community water charges and council water charges; mortgage interest payments; structural insurance premiums (for owner occupiers); ground rent and service charges. Among other poverty indicators, the report mentions material deprivation for pensioners , and combined low income and material deprivation for children – where a child is in material deprivation and lives in a household where income is less than 70 per cent of the average household income. The Committee requests the Government to explain how these indicators are taken into account when determining the minimum amounts of the social benefits and allowances described in the report. Please refer in this respect to the infographs prepared by the Office in the attachment to the present conclusions and update the statistical and legal information on which they are based.
As the Committee will be aware, the UK system, which is a combination of contributory, insurance based social security and income related social assistance benefits, is based on the traditional Beveridge approach involving universal, mainly flat rate, benefits, as opposed to the earnings related benefit approach adopted by other European countries under the Bismarkian model. UK Benefits are not set with re ference to any “reference wage” – the way earnings are featured in benefits are through uprating (where it is only the annual change that matters and which is now measured through Average Weekly Earnings index – please see the explanation on benefit uprating in Part I of the main body of the Report above), or at an individual level (i.e. earnings brought to account in a means tested benefit calculation), or by use of the minimum wage in some contexts. It is not clear th at the committee’s question is particularly relevant to the UK position.
34

With respect to key measures aimed at reducing poverty
The Committee requests the Government to explain in more detail those elements of universal credit and the minimum income floor for the selfemployed,
Universal Credit and the self-employed
Universal Credit supports people to be self-employed where self-employment is the best route for them to become financially self-sufficient. Self-employment covers a wide range of activities. For some people it is their main occupation. Other people undertake small amounts of part time or occasional self-employment, which is not their main occupation. For self-employed claimants who are expected to look for work, we will determine whether the self-employment is their main occupation or whether it is essentially a part time or occasional activity.
Gateway Interview & Gainful Self Employment
For people who are self-employed and in a group expected to look for and be available for work while in receipt of Universal Credit, the start of their journey is a gateway interview. At the gateway interview, a Work Coach determines whether the claimant is gainfully self-employed for Universal Credit purposes. By that we mean self-employment is the claimant’s main employment, their earnings are selfemployed earnings, and it is organised; developed; regular and carried out in expectation of profit.
The adviser also looks at the relationship between the self-employed person and the people or companies they do work for. To do this the adviser considers a number of factors, for example, was income tax deducted at source, is the claimant’s work supervised, does the claimant have the powers of appointment and dismissal and can they employ a substitute, for example to cover holidays or sickness. If the claimant can’t appoint or dismiss others, for example, this may indicate the claimant should not be considered gainfully self-employed but instead classed as employed.
Claimants are required to provide a range of evidence, examples - Previous Tax
Returns and business accounts details, to enable a Work Coach to make this determination. The interview is also used to determine eligibility for a start-up period; set the claimant’s Minimum Income Floor level; agree the ‘Claimant Commitment; and signpost the claimant to available support. There is guidance in place to support this.
Where a claimant is not gainfully self-employed, the minimum income floor is not applied and they are required to meet work sear ch conditions. Someone’s expected available hours may be reduced to take account of self-employment activity provided the adviser agrees it is appropriate. It is not our intention to disrupt any business that someone may be running, provided it is the best possible route for them to become self-sufficient.
If they are deemed to be gainfully self-employed, they are exempt from work search and work availability requirements so that they can focus on their business.
35

The Minimum Income Floor
The Minimum Income Floor is designed to address flaws in the current system which allows self-employed claimants to receive full state support while declaring low or zero earnings and to prevent people from under declaring earnings. This situation is unsustainable and unfair on the taxpayer.
The Minimum Income Floor, an assumed level of income, was created to encourage individuals to increase their earnings through developing their self-employment. The
Minimum Income Floor level is determined by multiplying the number of hours the claimant can reasonably be expected to work or be looking for work by the relevant national minimum wage for their age, minus notional income tax and National
Insurance contributions, to produce a net figure.
A claimant’s expected hours of work depend on their circumstances. For someone who has no limitations on their expected hours of work, this is 35 hours per week.
Where a person has limitations on the hours they can reasonably be expected to work their Minimum Income Floor level is reduced. Therefore, the level of the
Minimum Income Floor matches the work expectations of other claimants in similar circumstances.
Where a Minimum Income Floor is applied, claimants are exempt from having to search for or carry out any other work, allowing them to concentrate on making a success of their business and maximising their returns up to and beyond the level of their Minimum Income Floor.
Only claimants who have a work expectation and are gainfully self-employed have a
Minimum Income Floor applied to their Universal Credit award.
Claimants who are moved by the DWP from legacy benefits to Universal Credit whose circumstances otherwise remain the same will not receive less money, however will have a Minimum Income Floor applied after six months. This gives them time to develop their business before a Minimum Income Floor is applied.
Start-up Period
The government recognises the need for claimants who are setting up a business to be given time to establish themselves and develop their business and customer base.
Claimants who are gainfully self-employed, are within one year of starting out in selfemployment, and are taking active steps to increase their earnings, are eligible for a
'start-up period.' This is one year during which the Minimum Income Floor is not applied and the claimant is not required to look for or take up alternative employment. Claimants are allowed a new start-up period for a new business every five years.
Published Guidance
– please see
Universal Credit and self-employment
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The Committee also requests the Government to explain in more detail those elements of universal credit that are aimed at people in absolute low income and permit to raise their individual incomes above this threshold in real terms.
The committee might find of interest two published reports: Universal Credit at Work
(published in October 2014 and Spring 2015 ): progress reports on the implementation of Universal Credit: how the Government is restoring work incentives, renewing fairness and transforming lives.
The October 2014 report explains the philosophy and policy behind UC, including to improve take-up of the new benefit and to promote entry into, and progression in, work. Chapter 4 on costs and benefits, and chapter 5 on emerging evidence are of particular interest.
The introduction to the Spring 2015 report states: “In improving people’s prospects, the evidence has always held that work is the best way for individuals to lift themselves and their children out of poverty.” This report says more on early positive analysis and evaluation.
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